Britain's 10 worst scams

February is Scams Awareness Month. Consumer watchdogs at the Office of Fair Trading want the public to be on their guard against criminals who trick us out of billions of pounds every year. Using the latest research published by the OFT, This is Money has compiled this guide to the 10 worst scams to help you avoid becoming a victim:

1. BOGUS HOLIDAY CLUBS

How do they work? Consumers are approached while on holiday or at home in the UK. The promise of a free holiday is used to lure them to a presentation where they are pressured into signing up to a holiday club offering great value holidays all over the world in top-class accommodation.

In reality dates or destinations are not guaranteed and holidays are often not available when and where wanted. Victims later find out that the 'free' holiday isn't free, as they must pay for flights and other add-ons and go somewhere they don't want to go at a time that doesn't suit.

• Yearly cost to UK public- £1.17bn.• Number of victims - 400,000.• Average loss per victim - £3,030.• Victim profile - A high 78% are aged between 35 and 64.

How do they work? Consumers are contacted by letter, phone or e-mail and offered a chance to invest in shares, fine wine, gemstones, art or other 'rare' high-value items. The promise is that these will rocket in value. But what is offered is often over-priced, very high risk and difficult to sell on.

• Yearly cost to UK public- £490m.• Number of victims - 90,000.• Average loss per victim - £5,660.• Victim profile – Three quarters are men and more than a third are aged over 65.

How do they work? Consumers, often friends or relatives, are asked to pay to become a member and are promised large commission earnings if they recruit others to the scheme. If enough new members join, the pyramid will grow, possibly enabling some members to make money. But, in order for every member to make money, there would need to be an endless supply of newcomers.

How do they work? Consumers are contacted by someone saying they need help transferring money overseas, usually millions of dollars. Writers, who often claim to be a relative of a deposed or dead politician, say they needs to transfer this cash to a bank in their country, and that if the recipients lets them use their bank account they can keep a big slice for themselves. Victim supplies bank details which are used to plunder their account.

How do they work? Consumers receive a letter, phone call or e-mail telling them they have won a major cash prize in an overseas lottery. They will often be told to telephone a sales agent who will ask the victim to send money to cover adminstration, customs and taxes. The winnings do not exist and are never received.

• Yearly cost to UK public- £260m.• Number of victims - 140,000.• Average loss per victim - £1,900.• Victim profile – Slightly more men than women believe it is possible to win a prize in a lottery without ever buying a ticket.

How do they work?Consumers reply to an advert offering fast loans regardless of credit history. Targets are told their loan has been agreed but before they can have the money they must pay a fee to cover insurance on the loan. After the fee is paid the victim never hears from the company again.

• Yearly cost to UK public- £190m.• Number of victims - 110,000.• Average loss per victim - £1,800.• Victim profile – More women than men. Most are short of money, but very few report the crime.

How do they work?Consumers attend a free presentation about making money from property investment. They are persuaded to hand over money to sign up to a seminar or course promising to teach them how to make money dealing in property. Schemes may offer the opportunity to buy properties that have yet to be built at a discount. Victims lose their substantial joining fees and end up with no property. A variation is a buy-to-let scam where companies offer to source, renovate and manage properties, claiming good returns from rental income. In practice, the properties are near-derelict and the tenants non-existent.

• Yearly cost to UK public- £160m.• Number of victims - 40,000.• Average loss per victim - £4,200.• Victim profile – A high 76% of victims are middle-class men aged between 35 and 64.

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8. PREMIUM RATE PHONE PRIZE SCAMS

How do they work?Consumers receive text or automated phone message telling them that they have won a major prize and urging them to ring or text an 090 premium rate number. Calls to the premium rate number cost up to £1.50 a minute and the caller is kept on the line listening to a recorded message for several minutes. Nearly everyone who responds ends up with a cheap 'giveaway' item such as discount vouchers worth less than the cost of the call and may also be charged a delivery fee to receive their 'prize'.

• Yearly cost to UK public- £80m.• Number of victims – 1.8 million.• Average loss per victim - £80.• Victim profile – Losses higher than expected because victims often ring several times hoping to hear what the big prize is.

How do they work? Consumers respond to adverts – sometimes pasted on lamp-posts - offering a quick way to make a lot of money without any skills or expertise. First, victims have to pay a registration fee or to buy goods. Later they find there is no work or they will not be paid for any work done. Here are some common examples:

Addressing or stuffing envelopes: A registration fee is payable to join in return for simple advice on how to place similar advertisements to attract other people into the scam.

Home assembly kits: A fee is payable to receive a kit for making items such as from baby boots, aprons or toys. The kit is usually inadequate for making the goods required. The scammer promises to pay for the goods but then rejects them on the grounds that the work is sub-standard.

Home working directories: Promises of a variety of different home work opportunities in return for a fee of £10 to £25 are made, but the victim only receives a directory of other companies who have their own registration fees and a list of shopping catalogues.

• Yearly cost to UK public- £70m.• Number of victims – 330,000.• Average loss per victim - £240.• Victim profile – Often less well-off young women looking after young children at home.

How do they work?Consumers receive an official looking letter or e-mail notifying them that they have already won a large cash prize, government payout or other major award. To claim the win the recipient must often send a fee of between £5 and £30. Or that an order must be placed from an accompanying mail order catalogue in order to claim the prize. In reality the recipient is only being offered the opportunity to enter a prize draw or sweepstakes with a very small chance of winning the major cash payout.

• Yearly cost to UK public- £60m.• Number of victims – 380,000.• Average loss per victim - £160.• Victim profile – Many more women than men fall for this false promise. As with foreign lottery scams, they do not question the idea that they should get a large prize for doing nothing.